Having traversed above the 1.05000 ratio late last week and early this one, the EUR/USD has seen selling develop once again and is battling to remain above the 1.04000 level.
The EUR/USD is near the 1.04100 ratio as of this writing and traders are urged to compare it to the Forex values being seen as they read this article. Late last week and early on Monday the EUR/USD did show the ability to traverse above the 1.05000 mark, but these higher values were not sustained. Essentially the EUR/USD is trading near levels at the time of this report, that it traversed last month. The range of the EUR/USD remains locked in a battle of sentiment.
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The European Central Bank will release its Main Refinancing Rate decision later today and it is expected that a 0.25 basis cut will be seen. The U.S Federal Reserve did not cut interest rates yesterday, and sounded cautious about the mid-term. However, European economic conditions are weaker than U.S data and the ECB is in a position in which it is expected to remain dovish. But before traders rush into react to the potential rate cut today and its potential affect in the days and weeks ahead, they should understand the ECB decision has already been factored into the EUR/USD. Only if the ECB doesn’t cut its interest rate today would there be a violent reaction.
Rhetoric and Data for the EUR/USD in February
Now that President Trump is within the White House and financial institutions have witnessed his first week in office, financial institutions may have digested their nervous sentiment and may be able to produce more tranquility. The trading in the EUR/USD the past month while having tested lows below the 1.02000 level momentarily on the 13th of January, could be argued to have produced a calmer month of Forex compared to the previous three.
Yes, the EUR/USD still remains in long-term lower values technically, but this may not change soon. The ability of the EUR/USD to climb above the 1.05000 level last week was intriguing but its reversal back to values it saw at this time last month is not exactly optimistic for bullish sentiment. The EUR/USD will have to produce solid buying and sustain highs above the 1.05000 for a week or so before retail traders can claim that financial institutions have become more optimistic. Political rhetoric mixed with fundamental economic data in the coming days and weeks will prove important. The ECB should cut its interest rate today, if it does this it could provide optimistic reactions from EUR/USD bulls.
Trump, U.S Inflation Numbers and Employment Statistics
While January’s trading provided EUR/USD speculators an opportunity to wager on the price range which proved rather steady, the same could occur in February and folks should be braced for this potential. Unless there is a surprising development from President Trump or the U.S Federal Reserve in the weeks ahead, it is the U.S inflation data and employment numbers that could move the EUR/USD a bit, besides an aggressive ECB suddenly emerging.
- The lower realms for the currency pair could remain a testing ground if financial institutions believe the lowest depths remain around current support between 1.04000 and 1.0300.
- Looking for a massive move higher remains a bit too overly ambitious.
- The safest wager may be to simply use technical support as levels to look for moves higher with take profit targets being used efficiently.
EUR/USD Outlook for February 2025:
Speculative price range for EUR/USD is 1.03200 to 1.06400
The broad Forex market remains stuck within a strong USD centric mode. Major currencies like the EUR may feel like they have been oversold and hold the opportunity of solid gains eventually, but day traders timelines compared to mid-term outlooks makes this difficult to bet on. In the near-term and coming weeks of February the EUR/USD is likely to remain with a choppy scope. Will the ECB sound more aggressive today compared to their usual cautious approach?
Financial institutions may feel more calm about President Trump, but if the U.S White House does initiate tariffs against trade partners outside of Europe, this could still have a knock on affect which causes sentiment to become risk adverse – meaning the USD may remain stronger than many believe it should be. It is difficult to argue against the trend. The EUR/USD did test long-term lows in the middle of January, perhaps the darkest days are now complete, but timing an upside move in the EUR/USD that becomes sustained remains difficult .
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